The Mac Observer

Skip navigational links

You're viewing an article in TMO's historic archive vault. Here, we've preserved the comments and how the site looked along with the article. Use this link to view the article on our current site:
The Reasons Behind Apple's Stock Decline

The Reasons Behind Apple's Stock Decline

by , 2:25 PM EST, January 24th, 2008

Apple reported healthy growth in its Q1 Earnings Report, and it's hard to find fault with any aspect of its business. Even so, Apple's stock has declined for three reasons, according to Stan Beer at ITWire on Thursday.

The market was expecting great holiday quarter results from Apple, so Apple merely met expectations. However, several factors have contributed to a depressed stock price.

"What the market is reacting to, however, are three things," Stan Beer wrote. "a lack of any new killer products or announcements at Macworld 2008, a lack of belief that Apple can sustain its breakneck growth rate, and last but not least a very real fear that Apple, being a luxury consumer goods provider at the premium end of its market, will be hit by what is now believed to be an inevitable economic downturn in the U.S."

By contrast, in 2007 customers were expecting big things from Apple based on the Macworld 2007 announcement of the iPhone. Sales of the iPhone and its successful competition against the legacy vendors drove the stock to near US$200.00.

The Macworld 2008 keynote was not so spectacular. "Comparing Macworld 2008 to Macworld 2007 was like comparing chalk and cheese. Like the iPhone, the ultra slim MacBook Air was predicted months in advance but few cared. Everyone knew it was going to be a premium priced product that would have no great growth effect on Apple's business," Mr. Beer noted.

There is also concern that with a possible downturn in the U.S. economy, the 3G iPhone will be greeted with indifference. "APPL shares have dropped because at their present level of around $139 with a PE of more than 35, investors want earnings growth to continue at the breakneck speed of 2007 if they're going to pay a premium for the stock, "Mr Beer concluded. "...and they're uncertain as to whether Apple can achieve that in the coming year."

iPO notes that a gloomy atmosphere often tends to put Apple's achievements and prospects in a tainted perspective. There's no sign that Apple is letting up in any of its business areas, and an iPhone announcement in a Macworld keynote only happens once in a lifetime.

Recent TMO Headlines - Updated September 25th

Sun, 12:06 PM
MGG 624: Sierra, APFS, Wi-Fi and Personal Servers
Sat, 9:04 PM
Can't Remotely Control Your HomeKit Devices? Enable iCloud Two-Factor Authentication
Fri, 9:43 PM
ScanSnap on Sierra Update: Fujitsu Warns of Data Loss In 'Specific Circumstances'
Fri, 9:21 PM
iOS 10: How to Disable (Some) Haptic Feedback on iPhone 7
Fri, 7:36 PM
Use the Digital Crown to Control Your Apple Watch Series 2 Screen Brightness
Fri, 7:03 PM
Install Secure XFINITY WiFi Profile On Your New iPhone
Fri, 6:29 PM
iOS 10: How to Optimize Downloaded Music Storage
Fri, 6:01 PM
iOS 10.0.2 Fixes Headphone Audio Controls, More
Fri, 5:33 PM
iOS 10: Apps are Gaining 3D Touch Widgets and They're Freakin Sweet
Fri, 5:33 PM
Use a Password Manager to Store Your Driver's License and Passport
Fri, 3:48 PM
This May be The 4K UHD Apple TV We've Been Waiting For
Fri, 1:50 PM
TMO Daily Observations 2016-09-23: Apple, AI, and Buying Tuplejump
  • __________
  • Buy Stuff, Support TMO!
  • Podcast: Mac Geek Gab
  • Podcast: Apple Weekly Report
  • TMO on Twitter!